STANDBY COMMITMENT

STANDBY COMMITMENT

The mortgage banker frequently protects a builder by a “standby” agreement, under which banker agrees to make mortgage loans at an agreed price for many months into the future. The builder deposits a “standby fee” with the mortgage banker for this service. Frequently, the mortgage broker protects self by securing a “standby” from a long-term investor for the same period of time, paying a fee for this privilege.